Japanese households’ inflation expectations remained stable in the three months to June, according to a Bank of Japan (BOJ) survey, signaling progress toward the central bank’s 2% inflation goal.
The survey showed 85.1% of households expect prices to rise within a year—slightly down from 86.7% in March—while 83.1% expect higher prices in five years, a minor dip from 83.5%. On average, households now foresee a 12.8% increase in prices over the next year, the highest since 2006.
These expectations reflect shifting attitudes in a country long plagued by deflation, as companies increasingly pass on higher raw material costs to consumers.
Despite consumer inflation staying above 2% for three years, the BOJ remains cautious, aiming to confirm that underlying inflation—driven by domestic demand and wage growth—is sustainably rising before considering further rate hikes. The BOJ raised interest rates to 0.5% in January after exiting years of ultra-loose policy.
Sources say the BOJ may revise its inflation forecast upward this month due to continued food price increases, especially rice.